D... Very frustrating to be on the short side of the market while record highs are broken every day. And have up days every single day of the week. All I have to brag about is one of my bull put spreads expires today, and I get that net gain to offset some of my losses.
I haven't loss that much overall, and my net worth has significantly gone up overall. My 401K is even signaling sunny skies as I am well on tract for meeting my retirement goals + surplus.
Yet, I feel like I got it all wrong. Now I'm stuck in this bearish position that loses a little bit each day, while I wait and wait for a pullback. Market will not even pullback enough for me to buy more bull put spreads.
This is ticking me off.
But, what else to do at this point , but wait it out.
John, I have mentioned to you before that trying to time this is to costly. I have little faith (I used to have more) in my ability to time markets. What I know from my modelling reveals that I am much more likely to leave enormous money on the table if I try to time this by jumping in and out of my short position. I have spent years (with much success) looking for market inefficiencies (mostly via options) and nothing has ever worked (or modelled) this well. I can make more permashorting, with no intention of ever covering, by staying short vxx. I will not cover or reduce on a 20-30 percent pullback, and I welcome one as it just presents more opportunity for wealth creation. I have been margin called quite a few times in my younger days but have never came close since I have been riding the vxx pony.
Caper you're absolutely right. Personally I allowed the rise in 2011 for VXX to #$%$ me and I have never profited from this on the short side the way I should have.
Every time I look at puts they seem too expensive. But they keep going up and up and up. Do you have a specific strategy with your put buying (i.e. do you just buy puts or put spreads every month at the money) or is it more art than science, waiting for spikes to add more while keeping a core of longer term puts?
For some reason I keep stubbornly thinking there cannot be a free lunch in the stock market. But there obviously has been. Contango just keeps trucking along and I'm completely unable to understand that. The only thing I can come up with is as some have said here Barclay's is artificially pushing the futures up when they buy, and that's why there's always so much contango.
You got it right, no doubt. And, I was intending to trade this year just as you described. I even started out this year trading that way, just veered off, and now stuck short the market while the market makes this dead reckoning projection higher.
I know that, just as markets don't go straight down forever, they certainly do not just go up. In fact, this has to be one of the few pure bull runs that this market has had in the last two decades.
When we do finally get a 3% or more pullback, I will start building a short VXX position and stick with it this time.
I am not hurting too badly though. Like I have been saying all along, my net worth has been growing every day that this market goes higher. I am actually better off if this bull run continues forever!
But, I would much rather see some pullbacks on the way higher so that I may make trades in my trading account that will benefit my trading account, while my retirement accounts continue to get the benefit from an overall bull market for the long run.
No, don't just wait it out, meaning holding your position short. I tend to get burned on big bull runs too. I often miss the starts and later get out to early and go short, not believing they can keep going, but they usually do. (the old wall of worry) The fact is the technicals are very bullish. You are better off waiting until the bull trend confirms a breakdown than trying to front run it, especially if trying to hold VXX. That is a loser's game. When the technicals say it is time to be short the market, short something, but don't buy VXX or its brethren. ONLY go long VXX and UVXN for very short day trades, and even then it is risky and there is usually something better to trade.
I never go long VXX. I have been waiting for a market pullback so that I may reestablish a short position in VXX.
I am net short the market, and as my hedges, multiple bull put spreads, expire, my account gets a little more short each week.
Without any pullack in the market this week, I was not able to add to my bull put spread positions.
I don't know how any technicals could suggest that there is a greater potential for upside than a pullback at this point. The fed would be foolish to keep printing money if the risk of inflation even whispers out there when we are clearly out of danger from deflation. With EU calm and Asian markets rebounding, support from the fed is no longer a necessity. Perhaps a luxury, but not a necessity.
And, if some unexpected event does rock the market, following this unprecedented run up, the fed may not have the ability to stop a market freefall. Really, what would the fed be able to do?